Medium Term Financial Strategy (MTFS) 2025/26 - 2029/30
Appendix 2 - financial challenge beyond 2024/25
The new Government have announced a Budget on 30 October 2024 and Spending Review expected to conclude in Spring 2025 which will set the Department Expenditure Limits (DEL) for all government departments. Until the outcome of the Budget and Spending Review, and the Local Government Finance Settlement, the assumptions in the MTFS remain subject to significant uncertainty and they will be revisited once further announcements are made.
The unknown impacts alongside the level of risk to finances mean that all forecasts will be closely monitored and potentially refreshed more frequently than usual. Staying the same will not be an option for the Council. The Council will be required to change to deliver its priority outcomes within the estimated funding assumptions. The budget setting for 2025/26 and beyond is to remain highly challenging.
Any increase in the base rate or further uncertainty in the economy could translate into increasing the cost of borrowing should the Council need to borrow for the Capital Programme. This will have a corresponding impact on the revenue budget and business cases for projects included in the Capital Programme.
For planning purposes, provision is included for the impact of pay awards and estimated impacts of the National Living Wage which are unfunded by Government.
Proposals for budget cuts may have staffing implications. These will be managed through the Council's Redundancy Policy and Procedure as necessary. At this stage it is proposed that any cost of redundancy payments and the release of pensions (if applicable) as required by the Local Government Pension Scheme Regulations will be met from within the overall corporate resource position at outturn each year. This position will be kept under review and updated as part of the budget proposals to Cabinet.
Economic Growth
Local economies are linked to national economic growth. The Council vision for Gateshead is of a fairer, greener and more resilient economy that enables everyone to thrive and delivers good jobs, growing businesses and great places to live and work. The Council aims to promote a strong and sustainable local economy leading to wellbeing and prosperity for residents, communities and businesses. This will be supported by a planned approach to investment to boost local economic growth such as improving local infrastructure and wider transport links.
Success in this area will enable the Council to have a stronger medium- and long-term financial position and allow redirection of resource to activities which protect the most vulnerable.
On 30 July 2024, the Deputy Prime Minister set out to the House of Commons the Government's plan to build the homes the country need, announcing the launch of a consultation on proposed changes to the National Planning Policy Framework (NPPF) and other aspects of the planning system including the introduction of strategic planning, changes to planning fees and new thresholds for some National Strategic Infrastructure Projects (NSIPs).
From a financial perspective the Council will look to work with partners and invest resources to generate economic growth that may result in increased business rates and council tax income to the Council.
Social Care Challenges
The social care demand and cost pressures estimated at £26m (excluding expenditure matching ring-fenced grant funding) over the period of the MTFS represents the biggest cost of the estimated funding gap. Part of the strategy to deliver a sustainable financial position will be to manage this demand through interventions and service transformation.
Adult Social Care | 2025/26 £m | 2026/27 £m | 2027/28 £m | 2028/29 £m | 2029/30 £m |
---|---|---|---|---|---|
External fees | 3.178 | 2.626 | 2.754 | 2.884 | 3.014 |
Demands | 1.161 | 1.780 | 1.783 | 1.734 | 1.609 |
Total pressures | 4.339 | 4.406 | 4.537 | 4.618 | 4.623 |
BCF additional funding | 0.135 | 0.136 | 0.139 | 0.172 | 0.176 |
MSIF additional funding | - | - | - | - | - |
Discharge Fund additional funding | - | - | - | - | - |
Total | 4.474 | 4.542 | 4.676 | 4.790 | 4.799 |
Demand interventions | (2.117) | (2.270) | (1.878) | (2.178) | (1.481) |
Children's Social Care | 2025/26 £m | 2026/27 £m | 2027/28 £m | 2028/29 £m | 2029/30 £m |
---|---|---|---|---|---|
External fees | 0.743 | 0.645 | 0.662 | 0.739 | 0.758 |
Demands | - | - | - | - | - |
Home to school transport | - | - | - | - | - |
Total pressures | 0.743 | 0.645 | 0.662 | 0.739 | 0.758 |
Demand interventions | (0.612) | (1.744) | (0.577) | (0.560) | 0.000 |
Adult's Social Care
An ageing population means that a greater number of people in Gateshead are likely to be living with long term conditions and becoming frail in the years ahead, this will increase demand on both health and social care services. In addition, complexity of need is increasing across all age groups, and the aim to keep people out of hospital/facilitate discharge from hospital quickly will continue to add to demand pressures.
Our communities in Gateshead are diverse and we know that some of them face more challenges than others. In Gateshead, 31% of our residents live in the 20% most deprived areas in England. Deprivation is closely linked to poor health outcomes and social care needs are further shaped by inequalities within Gateshead, with residents in deprived areas experiencing fewer years good health in comparison to counterparts.
Currently 80% of the population are adults, with 23.1% aged 65 and over. The overall population is expected to grow by 5% by 2043; with an ageing population it is projected that by 2043 there will be an additional 12,316 people aged 65 and over, an increase of 29%, demanding more support for social care services.
The Integrated Adults and Social Care Strategy 2023-2028 sets out a five-year strategy for the service outlining areas of focus, direction and ambitions. The Strategy is underpinned by an action plan and will support the delivery of the Medium Term Financial Strategy by managing the demand for services. We will continue to focus on the following key areas and further build on the achievements made in prior years.
Prevent, reduce, and delay the need for support:
- Redesign Adult Social Care pathways focusing on prevention and early intervention is in progress.
- Work to maximise access and availability of information, advice and guidance, improving navigation and easy to read information.
- Embed the local VCSE organisations in prevention, planning and delivery.
- Develop online assessment functionality, including financial assessments and care assessments.
- Work with Tech Enabled Care partners to develop solutions to common problems being faced by those needing our services.
- Develop and launch a new Direct Payments Support Service.
Caregivers and the Voice of People and Communities:
- Improve information and advice support to Caregivers.
- Develop Engagement and Co-production Strategy and Framework.
- Finalise and publish Caregivers and young carers strategies.
Workforce and Commissioning:
- Development of our recruitment offer and workforce brand, including retention of our workforce.
- Develop a new quality pathway for contract and quality management for providers.
- Equipping our workforce with the right skills and knowledge to deliver strengths- based assessments and successful enablement approaches.
- Continue to create opportunities for development and career pathways, including health and social care workforce.
To deliver the aims of this Strategy will require a review of how people access adult social care, domiciliary care market transformation and investment, a review of and improved access and infrastructure for direct payments, a review of the approach to hospital discharge, a partnership approach to service delivery, development of alternative provision such as expansion of extra care and a refocus of in-house services.
Through Gateshead Cares, a multi-agency alliance of health and social care organisations in Gateshead, there are strong joint working arrangements across system partners which are well embedded to deliver an integrated approach to health and care in Gateshead.
The Better Care Fund (BCF) is part of a wider programme of work to integrate health and care across Gateshead Place for the benefit of local people and their communities. The programmes and services funded through the BCF are focused on shifting the balance of services towards community support with a focus on prevention, early help and self-help to avoid hospital admissions; developing integrated care and treatment for people with health and care needs; minimising the length of stay in acute settings and supporting home first discharge arrangements where feasible.
In addition, the Service intends to adopt the Community Led Support working principles to support the Thrive agenda and develop accessible services that support people in their local communities. In delivering all the outcomes described it will be necessary to create a new social care delivery pathway that puts local communities, prevention and people at the heart of what we do and is built on the foundation of strengths-based practice and person-centred delivery.
The Medium Term Financial Strategy continues to make a number of assumptions in relation to funding including the continuation of the Market Sustainability and Improvement Fund.
New government announcements in the year include the cancellation of adult social care charging reforms (care cost cap and associated measures) which will no longer go ahead. This will have no impact on the Strategy.
Children's Social Care
In Gateshead the numbers of children in care have increased significantly over recent years from 414 at March 2020 to 527 at March 2024. However, 2023/24 was the first year in five years there was not an increase year on year. There has been a reduction in new children coming into the care system of 10.4% in the last year and a 9.6% increase in the numbers of children exiting the care system in that same period. However, the rate remains higher than statistical neighbour averages.
The high numbers are exacerbated by an increase in the complexity of need and a market which is unable to meet the needs of children and the extent of the demand. The cost of living crisis on the back of a global pandemic has had significant and long-lasting impacts on child poverty which is critical to the local context.
There is a lack of placement sufficiency locally, regionally, and nationally resulting in increased cost pressures from children living in higher cost placements. Overall, the budget associated with placements for children in care in the council makes up 54% of the overall children's services budget.
The extent of children's complex and mental health needs is also having an impact on the capacity and availability of placements able to meet need. There has been a reduction in the numbers of in patient mental health beds for young people nationally over the last few years at the same time as children's needs are increasingly complex. There are limited community options for children with the most complex needs and a very limited market to accommodate these children and therefore the cost of doing so is significant.
Children's services in Gateshead have a combined strategy that addresses a reduction in the overall number of children in the looked after system alongside a focus on ensuring that where children do need to come into the care system they can live within family units wherever possible and as locally as possible, either within extended family units or with Gateshead's foster carers for as short a time as is in their best interests.
There is a focus on reducing the need for children to come into the care system with a range of strategies and approaches focused on children on the edge of care.
As well as a comprehensive early help offer being delivered via nine locality based Family hubs there is an enhanced and increased service offer for all families to have the opportunity to be a part of a Family Group Conference. This involves a plan developed by the extended family to support children remaining living with their networks. A DFE funded pilot focused on financial support for extended families to care for these children is also being piloted as part of a national evaluation to further support this work.
A new multi-agency vulnerable adolescent service has been developed which brings together services supporting vulnerable teenagers is now in place and includes intensive outreach support; support for young people who are missing from home and care; substance misuse workers; youth justice workers and mental health staff to support young people to remain safely living with their families and prevent entry to care. The new Trusting Hands service with investment from the NHS is a key part of this approach.
The Pre-birth service was set up in 2022 to work with families who are expecting a baby where there are known safeguarding risks to provide intensive support to prevent the child coming into the care system.
Where children do need to come into the care of the Council, a refreshed sufficiency strategy has been developed which is focused on ensuring children can live with extended family on kinship care arrangements where possible, or with our own foster carers.
As a result, a refreshed marketing and communication strategy is in place to ensure that the Council recruits as many foster carers into Gateshead as possible as this is better for children and a more cost effective way to care for children. We continue to see a steady recruitment of in-house foster carers, with 8 households being recruited since April 2024, offering Gateshead 12 additional beds. This means that currently the number of foster carer households totals 145.
There are a number of ongoing fostering assessments which will be progressing and will conclude in the next 3 months. These will provide a further 6 foster carer households and offer us an additional 7 beds. As well as the regional Fostering Pathfinder approach to recruitment, Gateshead will continue to take a more community based approach which is offering some success, which includes information sharing sessions and use of social media platforms
A regional pathfinder project was launched in early 2023 with funding from the Department for Education (DfE) to support a collaborative approach to recruitment across the North-East.
Whilst the use of Independent Fostering Association (IFA's) places is still high they have begun to reduce in recent months and are now 7% lower than they were a year ago. IFA placements cost twice as much as in house foster placements.
External residential placements have continued to rise in the last year and are the single biggest pressure on the service. Whilst the average cost to the council of a commissioned home is approximately £5,400 per week after Integrated Commissioning Board (ICB) contributions, this can include costs of over £20,000 per week for children with the most complex needs. The top 10 costing placements are expecting to cost the council almost £3.5m in 2024/25 even after ICB contributions; representing 13% of the overall placement budget.
Two new children's homes have opened in Gateshead in the last five years, a further two are scheduled to open in 2024 and another in 2025. These three homes will provide seven additional places for young people. There is a strategy in place to move children in external residential homes back to live locally in Gateshead within our own provision or within externally commissioned provision within Gateshead.
There is also significant pressure from funding remand places. Between 2022/23 and 2024/25 it is estimated that over £1m will have been spent on accommodating young people on remand. Whilst there is a national funding mechanism based on the previous 3 year average number of bed nights, this does not factor in stays in secure children's homes, only young offender institutions. Therefore, the vast majority of these placement costs have resulted in overspends and this may continue into the future.
There are a number of grants within the service that are due to come to an end in March 2025, many of which sit in the preventative Early Help side of the service. Whilst further funding may be announced at a later date, the change in Government and their policy direction is still unknown and places greater risk of the funding reducing or even ceasing. In particular, the Family Hubs and Supporting Families grants are still unknown post March 2025 with their grant amounts to Gateshead equating to over £2.1m in total.
A new commissioning and tendering exercise for supported living provision is currently out for procurement which will increase the sufficiency of places for older young people, supporting independence and providing cost effective living options for young people who do not require care.
The commissioning service have a refreshed approach to market shaping and supporting the market. This will include supporting private providers in Gateshead to care for Gateshead's children; ensuring that relationships with the Local Authority are strong and that wrap around support from the Local Authority incentivises private providers to care for local children.
Home to School Transport is also an area of significant financial pressure and one which has seen significant growth in recent years, and this is expected to continue. There are a number of reasons for the increase in costs including, complexity of need, location of provision, availability of drivers and appropriately accessible vehicles and fuel prices. An externally commissioned consultant, PeopleToo are currently conducting a review of Home to School Transport in Gateshead.
Looking Ahead Threats
- Cost of living crisis and impact of cumulative high inflation rates if these continue to rise or do not reduce to BoE estimates;
- Any unachieved budget savings in the agreed savings programme leading to pressure the following financial year;
- Continued growth in demand in Adult and Children's Social Care Services and funding reforms and interventions are insufficient to address this;
- Unfunded pay pressures such as public sector pay award and the Government's National Living Wage aspirations, which also impacts on negotiations with care providers and commissioning costs;
- The performance of traded and investment income linked to wider economy;
- Continuing uncertainties on the pandemic impact on income from business rates and council tax and fees and charges;
- Challenges in recruitment and reductions/shift in work force from working in social care, linked to competing industries such as retail and hospitality;
- Addressing the health, employment, and poverty inequalities that the pandemic has added to;
- Increased demand for welfare, mental health services and debt advice;
- Increased demand for business advice and support.
Looking Ahead Opportunities
- Fundamentally review all Council services to focus resources on the delivery of priority outcomes and shaping the Council to how it needs to be in the future to withstand other pressures and delivery priorities;
- Continue to embrace and embed new ways of working arising from the pandemic such as putting the customer first, more efficient working practices, staff resilience and adaptability;
- Opportunity to accelerate climate change targets through reduced building use and travel;
- Accelerating and building on working with communities in locality hubs alongside the voluntary sector and other partners;
- Embracing the move to self-service and online services to provide a quick and streamlined service;
- Opportunities to rationalise Council buildings and assets through the Corporate Asset Management Strategy;
- Working closer in partnership with key partners such as the voluntary sector, health partners and the Police and Crime Commissioner to help residents to thrive;